Thursday, June 30, 2011

Agents Entering E-Publishing Services Arena

Back in December, I predicted the next chapter in the indie ebook revolution would be written by literary agents.

It's starting to happen, but like any new idea the early agency and author adopters may face vilification before they're recognized as heroes.

Some critics claim that agents-as-publishing-service-provider creates a conflict of interest. Hogwash. Agents owe it to their clients to consider all opportunities to connect an author's books with readers.

Some indie authors have piled on Joe Konrath for his decision to allow Dystel & Goderich Literary Management (DGLM) to manage the e-publishing of his forthcoming title, Timecaster Supersymmetry. At least one anonymous poster claimed Joe is a hypocrite for abandoning the indie ethos he has so effectively championed for several years.

His detractors miss the point. Joe's not a hypocrite. He's a smart business person.

The power of publishing is shifting to authors, and authors have the flexibility to enter into myriad business relationships of different shades and colors. Now is the time to experiment and take chances.

The author is running a business. The most successful authors are great writers who make smart business decisions. I often see talented authors undermining their success with poor business decisions grounded in fear and uncertainty (I touched on this last year in my post, the Seven Secrets to Ebook Publishing Failure). Joe's critics succumb to the FUD.

Smart businesspeople realize that just because they can do something on their own, doesn't mean they should do it on their own. Smart businesspeople align with business partners that add value.

Consider everything involved in getting a book from a writer's brain to the eyeballs of readers.

These essential inputs are services. At one far end of the spectrum, the indie can go 100% Do-it-yourself and perform all the services on their own. At the other extreme end of the spectrum is the full-service traditional publisher.

Between these two extremes lies a vast middle ground where indies can avail themselves of the value-added capabilities of service providers like agents.

Literary agencies have an opportunity to do for authors what some authors don't want to do on their own. The trend also means agents now have the ability to engage at a deeper level with all their clients.

Some of the commenters on Joe's post questioned the value of agents' e-publishing ventures. In response, Barry Eisler poked fun at the DIY-extremists:

I just wanna say that real self-published authors write their books longhand using quills they've made and inks they've concocted from materials culled from the forest floor, on parchment they've pounded out with their own fists from trees they've felled with their own neolithic tools, and sell these books by hand in the public square, which they reach shoeless and on foot, eating roots and berries they gather along the way. Anything else is corruption, sabotage, and hypocrisy! Fight the man, people!

I'm surprised by the number of writers so quick to pass up opportunities in favor of jealously guarding that X%. Some writers have a near-allergic aversion to allowing any intermediary to profit from their book.

The Equity Equation

There's a simple analysis any author can perform when deciding whether or not to cede that XX% to an agent, a distributor, a retailer, a publisher or whomever.

Paul Graham, the venture capitalist, published an elegantly simple formula in 2007 called The Equity Equation that entrepreneurs can use to determine the benefit they must receive to justify giving XX% of their company to an investor.

The formula works equally well for authors. When Joe gives DGLM 15%, it's easy to determine the minimum amount of value-add DGLM must provide for Joe's decision to be a smart one.

Using the formula of 1/(1-n) where n = .15, we see that if DGLM's involvement can increase Joe's results 17.5% above what he'd otherwise accomplish on his own, then Joe's ahead in this partnership. Good agents can earn their entire keep with a single phone call, and great agents work that magic continuously for the lifetime of the relationship.

Top tier agencies like DGLM are successful because they're expert at delivering multiples of that 17.5% for their clients.

Joe gains not only from DGLM's investment of time, money, smarts, connections and enthusiasm, but he also gains time to produce more writing.

I'm reminded of a pearl of wisdom from my mom:

If you plant a $15 tree in a $5 hole, you get a $5 tree.

The writer's book (or the writer's career) is the tree, and the hole is the environment you create to establish roots and acquire the life-sustaining nourishment of readers and sales.

If a quality service provider is willing to invest alongside an author and fertilize the effort, the author is penny-wise and pound foolish not to consider the options.

21 comments:

Good take as always, Mark. I've been posting about this debate on my blog and added a link to this post on my most recent update (yesterday in response to J.A.'s comments).

The first person to use an agency as a publisher crossed my radar a couple of weeks ago, and I posted this http://the-open-vein-ejwesley.blogspot.com/2011/06/publishing-mountain-of-change.html in response. As I was writing it I jumped back to your previous article from several months back (I bookmarked it), because I remembered you calling it.

Interestingly enough, I've met with some criticism as well, which is funny because I haven't published anything as of yet! :-) I do have an opinion, though.

The equation makes a great point. It'd totally be worth it to pay someone 15% if their efforts ending up increasing your bottom line by more than 15%.

I'm sure success also increases demands on one's time (I see some of this even with my modest success--requests for interviews and guests posts and emails for advice on e-publishing), so I'm sure you reach a point where it's useful to outsource some of the busy work.

It's fascinating to watch this all play out and to be a part of it. I just wish I'd gotten started a year earlier. More competition now. :D

I always chuckle when people mistake good business practices with an ideological crusade. For me this isn't about taking down the traditional publishing or bringing an end to print books, it's about finding a way to make money on my books. If I had a chance of squeezing through the gate of traditional publishing, I probably would. For a new author, that gate is tiny and getting smaller.

Wonderful points. If a writer wants to succeed, it's best to take advantage of the best publishing opportunities available. In this time of rapid changes within the publishing industry, it pays to be flexible and to keep an open mind regarding the best way to publish - what's the best way to publish one day may not be the best way tomorrow. Change is occurring too rapidly for an author to remain stagnant in their business plans and still expect to succeed.

The most often overlooked aspect of going Indie is the fact that we have to change from being primarily an author to being primarily a business person. As a business decision, it would seem to make sense to allow an agency to handle the production and promotion of our eBooks as long as, as you point out, the profit is there and we’re still “in the loop” of decision making. Once the agencies begin saying, “This is how it will be; you have no say in the matter.” Then we’re right back where we started.

The nasty comments aren't only coming from self-published authors, believe me. When those new agent deals were announced, published authors did a big "I told you so". If someone isn't comfortable trying to DIY, that's fine....no path to selling a book is wrong as long as it's legal and bringing in revenue, but I really wish both sides would stop with the us vs. them thing. It doesn't help the cause of Author.

Allan, thanks for raising the issue of control. I should have addressed it in the post. Nearly every agent I speak with is universally adamant on this point of control. They *do not* want to become the publisher. They view the author as the publisher. The agent wants to do what they've always done, which is work as the author's business partner, mentor, facilitator, commercial enabler and back office. By facilitating commercial maximization across both indie and traditional publishing channels, agents remain agents.

I think most people who seem to be questioning Konrath's decision are really more curious. For instance, what will the agent be doing for their 15%: Facebooking, blogging, criticism? He mentioned they will be finding people for him to do editing and coverart, but I was under the impression he already had someone to do those types of things for him--and how hard is it to do a search on the internet and find those services? Also, the issue of rights, already covered here. Can you fire the agent? Some wonder why agents can't be hired on a fee for service basis and not royalty based. So I think when some of these questions are clarified, we might all jump aboard.

Konrath's decision makes a lot of business sense -- his agency gets no more of a percentage than they would for selling his book to a print publisher. Materially, they do not benefit by encouraging him to self publishing over publish traditionally *unless* they are both good at it.

The conflict of interest argument, however, is not hogwash when you factor in agencies which are taking 50 percent of the proceeds. If I could do math, I would use your great link to figure out what an agency would have to provide me to be worth 50%...but I can't. So I forwarded the link to my dh, who can :-) I suspect most agencies would not be able to provide the value added to make the 50% split worth it (and what incentive do they have to make traditional deals where they take 15%?).

I don't think most of these 50% splitters are intentionally being unethical, though. They just think that sounds fair. And I think authors (like Konrath has proven) need to be aware of what our properties are worth, and be a little more of the hard-nosed business person when we make deals.

I am hearing more and more about agents considering various new roles. It only makes sense. They are looking forward and trying to position themselves--just like the rest of us! I think we are all in for surprises as the readers sort out how to find books they want to buy and read. I think the "time spent winnowing offerings" will matter. It matters to me now.

It's not hard to imagine readers learning that books pubbed by agents are likely to be consistently professional, better written, and better reads than they can find sifting through monster-sized listings on their own.

Last August I posted a comment on Twitter about this very thing, saying Smashwords was an absolute goldmine for agents.

Think about it: thousands of authors, most undiscovered, and among them there has to be a gem or two. Any agency that doesn't spend a little time downloading and assessing the latest debut works could be missing a trick.

Kudos to agents for finding a niche in the ever evolving world of publishing. I find it difficult to juggle all the balls in the air and I'm sure if I had the $ Joe has, I'd farm out some of that work, too.

The next question is... is there a way to find this type of agent, one who won't press you to work with a "real" publisher? Are old agents changing their model, or is this changing model spawning the birth of a new type of agent?

I understand why Konrath, and others would do this. Why did Amanda Hocking say she was signing with a real publisher? To take care of ALL of the grunt work. but I think she may loose out in the end by ceding too much power and selling to a teenage base for a much higher price.

This seems like a good, middle of the road way... no publisher demanding 50% of royalties and forcing you to sell an e-book for $15, but someone to help with finding editors/cover design and do some of the marketing for a minimal cost

But here's the rub, and let me know what you think... there are many, many more self-published writers now than ever before, and if even a large handful of these start looking for agents to market their e-books for them, well, the agents may find themselves too comfortable again, and demanding more again, because all of sudden they are in demand again. Instead of working real hard on a handful of projects when they may only make $.60 or $.70 per book, they may become like traditional publishers, agreeing to work a lot of books but only really marketing a handful hard while allowing the rest to languish.

Don't get me wrong, having someone to do some of the legwork, allowing me to write more, would be great, and once I've written something worthy of publishing I would love to go the way of an agent, but who knows how inundated they will be, and how much care they'll give to each project. Too often, people bite off more than they can chew, and most of the people underneath suffer as a result.

Your article unfortunately overlooks a dark side of this development, namely the advent of the agent-cum-publisher – the situation in which agents create e-publishing imprints and cut deals on behalf of their clients with themselves. This article by the Literary Agency Redhammer articulates this insidious development quite nicely. http://www.redhammer.info/news/agent-publisher/

I believe the big issue for many indie authors (in regards to Joe hiring an agent) is the concept of "Gatekeepers" that he's been so outspoken against. Perhaps they are not understanding the role these agents are playing. I'll be honest, when I first read the headline of this blog, I became rather outraged. After all, authors have come so far to break free from the bonds of, what many authors consider to be...leaches that serve no real purpose (I must admit...this is the first I've heard of this issue, which is strange because I read Joe's blog frequently).

Then I read your post and the irritation over the idea that these agents might be trying to wrest control away from the authors once more was alleviated. Their role makes a certain kind of sense...though I would venture to say that a title change might be in order. An author representative sounds much better than "literary agent" anyway, with the former sounding much more "author-centric" and the latter sounding like the old vanguard of Big Publishing.

More thoughts on the topic of conflict of interest, where the agent has the power to push a book either traditional or indie: The AAR (Association of Author's Representatives [the agent's guild]) has always prohibited agents from becoming publishers for fear of conflict of interest. The AAR's rules have made many agents reluctant to step into indie waters for this very reason. As a result, agents hands become tied. If they can't sell a book to a publisher, they can't serve the author. If a publisher low-balls them with a $1,000 advance, should the agent take it? In the past, the agent and author had little choice. The publishers had them over a barrel. Now, with the rise of ebooks and the indie alternative, agents have more negotiating leverage.

The opening for agents is for them to become publishing serve providers. The author is the publisher, not the agent.

Agents earn much of their income by getting their 15% of the advance. For the great many books that never earn out, it means the author and the agent earned more from the advance than they'll earn on book sales. When an agent advises an author to go indie, they're taking a calculated risk. They're forgoing the bird-in-hand sure thing of the advance and taking a risk right alongside the author.

Since the agent ultimately earns 15% of the outcome, I think their interests are about as perfectly aligned with author interests as possible. If anything, it takes guts for an agent to pass up publisher offers because that agent doesn't want to sour relationships with publishers.

@Christopher John Chater: I think the most important aspect of this trend is that it opens up new opportunities for indies. To work with an agent isn't necessarily a good or bad thing, or an either/or thing. It all comes down to the desires and capabilities of the author, and whether or not the author and agent want to become business partners.

@Kelly, re: 50%. Most agents earn 15% net proceeds. On a $9.99 list price book, at best the large retailers pay 70% list, so $7.00. If the agent uploads direct to the retail platform, they can pay 85% of that to the author, or $5.95, minus any expenses. So that's about 60% list. If the agent works with a distributor like Smashwords, that same $9.99 book earns $8.00 for sales on our Smashwords.com retail platform, or $6.00 if sold through one of the retail partners in our distribution network. Multiplied by 85%, this means the agent would pass on between 51% and 68% of list price to the author. So depending on the distribution method, in the above examples the author earns 51% to 68% list. Compare that against the author selling the ebook through a traditional publisher (where they'd only earn 7-15% list), or going DIY where they'd earn 60-80%. So if you consider this example, the author's only giving up 9-12% of the list price working with an agent vs. DIY indie. It's up to the author to perform their own calculation on whether or not the benefit they'd receive from associating with an agent is greater than the expense. I think for some authors, it could be a compelling option for some or all of their list, assuming they partner with a good agent.

@Bradley, on whether or not agents will gain too much power. I think agents have always been in demand, especially for those authors who can partner with a real value adder. The power of publishing is shifting to authors, and it's the author's choice. If any service provider partner (agent, editor, cover designer, publicist, retailer, distributor) exacts a fee that exceeds their value-add, the author has myriad alternatives to find a more efficient partner, or do it themselves. So I'm not concerned about lock in. You're in control.

Hey Mark, another great post and good food for thought. I do think that one thing has been left out of the equation, which is the reason most of us published with you in the first place. We grew tired of taking our children (novels,) door to door to literary agencies and having those doors slammed in our faces.

We came here because you welcomed us with open arms, unconditionally, even if some of our babies were hideous monsters. You allowed us the opportunity that we had been denied. Some of us have enjoyed considerable success because of your kindness and incredible vision. Smashwords has changed my life and I have you to thank for that.

Maybe I have too much pride; but here I am with essentially the same child and now that we've been embraced by the public, these same agencies are suddenly interested in my baby? Fool that I am, I can't accept that. Again, this is just my opinion, but Smashwords isn't some minor league for undrafted writers looking to make it to the big time. Many of us choose to be here because we are loyal to you and the indie philosophy. We believed in ourselves after being told that we weren't good enough; you opened doors for us that were unimaginable just a few years ago and our combined efforts are changing an entire industry.

A core element of our mission is to put authors in control of publishing. It's your baby, your work of art. You have the power and courage to publish directly to readers and face their judgment.

The tables are turning. Just a few years ago, self-pubbing was viewed as a badge of shame. Now it's a badge of honor.

Agents and publishers are courting indies who have proven a strong commercial potential. The indies now have the ability to ask agents and publishers, "what can you do for me that I can't do for myself?"

The author can listen to their answer, weigh the alternatives, and then make a decision. It's a good position to be in.

There's no single correct decision. It's a personal decision, and it can be a book by book decision. For some authors, agents will make sense, for others not.

It's nice to think that agents would like to work the ebook world--I just wish one would stumble over me--agents offer prestige and expertise that is needed--certainly for me--as I blindly go, where everybody seems to be going--and why not?